A strong, collaborative relationship with their payer partners helps this CFO serve patients and maintain the organization's financial well-being.
Hospital and healthcare CFOs are battling challenges they never expected to face all at once: a pandemic, inflation, labor shortages, rising expenses, and negative margins, to name a few. Through all these ups and downs, organizations and their leaders refuse to compromise on the quality of the healthcare provided to their patients—especially when those patients are some of the community's most vulnerable members.
Bridgett Feagin, CFO for Connecticut Children's—a level 1 pediatric trauma center with roughly $600 million in net patient revenue—has been working tirelessly since joining the organization in June 2020 to balance the hospital's financial needs with its mission to help sick children.
Feagin recently sat down with HealthLeaders to discuss how Connecticut Children's gets this done.
HealthLeaders: How do you incorporate maintaining the financial well-being of the organization with the mission of improving the lives of sick children?
Bridgett Feagin: One thing I always tell my team is, no margin, no mission. You need a margin to continue with the mission. So, it's about balancing the needs of the community and being able to cover your costs. We don't have high margins, but we need a decent margin to be able to continue with patient care to cover the inflation. So, we work with our payers to cover our costs and a little bit more than our costs because we need to purchase capital and facilities. So, it's a fine line. We have to be good partners with our payers in order to get paid for the services that we render.
HL: What does a good relationship between the hospital and payers look like?
Feagin: It's a collaborative relationship, meaning that they understand our needs and we also understand their business needs as well. So, if it costs $100 to take care of this patient, we at least need to cover our costs. Now at Connecticut Children's, we are a payer mix, close to 60% of Medicaid. Medicaid does not cover the cost. So, we need our commercial payers to give us a little bit more than the costs. So, we can shift some of that liability over to our commercial payers. And that's just the way it works. They understand that but we are working with the state as well to increase our reimbursement to cover our costs.
A good payer partnership also reduces administrative burdens, such as a denial. When a payer denies a claim, it creates more administrative work for my team. On the front end, we're talking to payers about what we need to do, to make sure we don't get a denial in the first place.
HL: Can you provide an example of the collaboration to ensure that a claim won't be denied?
Feagin: We have monthly meetings, where we change our workflows based on these conversations, so claims won't be denied. But one example would be with our NICU babies. Typically, we're supposed to notify our payers within 48 hours, that the baby is admitted to the hospital. However, those parents are not thinking about providing the information, because they have a critically ill child that's been admitted to the ICU.
We need to be compassionate and work with the family to get the information and find out who their insurance company is. Sometimes that takes over 48 hours. So, say if it goes to 72 hours, we'll contact the payer and say we'll have this information beyond the 48 hours. Now they'll have it in their system, and they get the authorization done. So that's an example of working with the payer to make sure we don't get a denial on the back end.
HL: How have the pandemic, inflation, and labor shortages impacted Connecticut Children's?
Feagin: The pandemic hurt us financially because elective surgeries were canceled. At the onset of the pandemic, it was not impacting children the way it was impacting adults. We couldn't do elective surgeries, so, it challenged our finances. But, coming through the pandemic, our volume is at record highs right now. Our volume is much higher than our capacity.
To deal with the labor shortage, we have increased our premium pay to [have staff] cover extra shifts. We had a lot of vacancies, so we had to bring in a lot of agency staff, so financially, that hurt us. However, we are maintaining it because our volume is high. We are probably one of the few hospitals in Connecticut that has a positive margin.
HL: What strategies as CFO are you utilizing to ensure not only the short-term but the long-term financial health of the organization?
Feagin: We're looking at different ways to bring in revenue. Part of that is making sure our documentation is complete and up to par, that our coding is up to par, and streamlining some of our processes in non-clinical areas. The key to that enhanced revenue capture was the documentation coding and getting the bills out of the door quicker.
Good expense management is also key—revenue capture, that's our short-term strategy. In the long term, we need to look at the needs of the community. Are we providing those needs and how do we provide the services at the least cost possible? So, looking at the labor and retention, we wouldn't have the vacancies if we had retention. So, we must look at retention policies and come up with retention programs that, in turn, will reduce our costs in the long run, because having to orientate new people costs us as we bring them in.
Staying on top of technology long-term has financial benefits as well. The more technology we can bring in, the more we automate, it reduces the manual processes that we have, which should reduce our expenses as well. And finally, we need to look geographically at the areas that we need to be in. Also, growth and new business opportunities are also our mid- to long-term financial strategy.
Amanda Schiavo is the Finance Editor for HealthLeaders.
A good payer partnership also reduces administrative burdens plaguing hospitals.
Growth, business opportunities, and revenue capture are some of the strategies Connecticut Children's is using to improve its financial health.